David Cameron was facing embarrassment last night after the disclosure that the Tory candidate in this week's high-profile Ealing Southall by-election was involved in donating nearly £5,000 to Labour.

A massive Conservative push ahead of Thursday's vote - to show that Cameron is now appealing in urban areas - will be undermined by the news that a company controlled by Tony Lit donated £4,800 to the governing party just days before his adoption as the Tory candidate.

A beaming Lit posed for a picture alongside Tony Blair at the event, which was held at the Riverbank Plaza on London's Embankment on 20 June - a week before the former Prime Minister left Downing Street.

Lit was then managing director of Sunrise Radio, which paid for a 10-seat table at the event. Eight days later Lit was selected as the Tory candidate for the by-election after he had been a member of the party for only a handful of days. He resigned his position at Sunrise in order to fight the seat.

The cheque, which was made out on 15 June, came from Sunrise Radio Limited. A further £4,000 was pledged by the Lit family at the event to attend a Hillary Clinton fund- raising event in Atlanta.

The Labour party has not yet received the second payment which would have taken Sunrise through the crucial £5,000 donations barrier. All political donations over £5,000 have to be disclosed. Labour yesterday released the picture of Lit and Blair and a copy of his company's cheque to secure maximum impact days before the by-election. Joan Ryan, the party's vice-chairwoman, said: 'This breathtaking and naked Tory opportunism will not fool the people of Ealing and Southall. David Cameron may lack judgment with his choice of candidate, but the voters of Ealing and Southall will see through his charade on Thursday.'

Lit last night played down the donation. 'As a businessman, I did indeed attend this event for the Asian business community, but like many British Asians I feel the Labour government does not have the answers to the challenges that currently face the country.

'Increasingly the Asian community is leaving the Labour party and joining David Cameron's modern and inclusive Conservative party.'

A Conservative spokesman said Francis Maude, who was the Tory chairman when Lit was selected, had been informed by Lit that he had met the Prime Minister when he was selected on 28 June.

'We are very relaxed about this,' he said. The spokesman added that the second payment for £4,000 had not yet been sent out because they had not received the invoice for it from the dinner.'

The disclosure of the donation will privately infuriate Cameron, who suffers another setback today when a new set of opinion polls confirm that Gordon Brown is enjoying a bounce.Labour has surged to a seven point lead over the Tories in an ICM poll for the Sunday Telegraph. Labour is on 40 per cent to 33 per cent for the Tories - the party's biggest lead with ICM since September 2005. The Liberal Democrats are on 19 per cent.

Another ICM poll, for the News of the World, found that 53 per cent felt Brown was best equipped to lead Britain compared with 27 per cent for Cameron. the same pollsters gave the Tory leader a five-point lead over Brown earlier this year.

Cameron had hoped to disprove the polls by knocking the Liberal Democrats into third place on Thursday, a result that would show the Tories are now appealing once again in urban areas. The Tories will now be forced onto the defensivein Ealing Southall.

Cameron has made a series of visits to the constituency after enjoying what he believes have been a strong two weeks. The Tory leadership was delighted when the Daily Mail welcomed Cameron's suggestion last week that he would offer tax breaks for married couples.

But George Osborne, the shadow Chancellor, told the shadow cabinet on Tuesday that there would be no rush to sign up to a tax-cutting pledge which could cost - according to Labour estimates - up to £3.2bn. 'George made clear he would look at the fiscal effects of the recommendation,' one source said. 'We were reassured that this was not designed to be a lurch to the right,' one shadow minister told The Observer. 'But we're still wondering whether it was a stealth lurch to the right.'